Candidates for president have plans to get more people
health insurance. Some would compel us to buy it; others would use the tax code
to encourage that. Regardless, insurance is the magic that will solve our
health-care problems.

But contrary to conventional wisdom, it’s not those without health insurance who are the
problem, but rather those with it.
They make medical care more expensive for everyone.

We’d each be better off if we paid all but the biggest
medical bills out of pocket and saved insurance for catastrophic events. Truly
needy people would rely on charity, not government, because once government
gets involved, unintended bad consequences abound.

If people paid their own bills, they would likely buy
high-deductible insurance (roughly $1,000 for individuals, $2,100 for families)
because on average, the premium is $1,300 cheaper.
But people are so conditioned to expect others to pay their medical bills that
they hate high deductibles: They feel ripped off if they must pay a thousand
dollars before the insurance company starts paying.

But high deductibles may be the key to lowering costs and
putting you in charge of your health care.

Five years ago, the Whole Foods grocery chain switched to a
high-deductible plan. If an employee has a sore throat or a sprained ankle, he
pays. But if he gets cancer or heart disease, his insurance covers it.

Whole Foods puts around $1,500 a year into an account for
each employee. It’s not charity but part of the employee’s compensation. It’s
money Whole Foods would have otherwise spent on more-expensive insurance.

Whole Foods CEO John Mackey

Here’s
the good part for employees: If they don’t spend the money on medical care this
year, they keep it, and the company adds more next year.

It’s called a health savings account, or HSA.

CEO John Mackey told me that when he went to the new system,
“Our costs went way down.”

Yet today, some workers have $8,000 in their accounts.

“That’s their money,” Mackey said. “It builds up over time
because the money is compounding for them.”

It will cover all sorts of future out-of-pocket expenses.

Most important, since employees control the money, their
behavior changed. Whole Foods workers started asking “how much things cost,”
Mackey said. “They may not want to go to the emergency room if they wake up
with a hangnail in the middle of the night. They may schedule an appointment
now.”

There was no need to ask about costs before because the
insurance company seemed to pick up the tab. But that drove up costs for
everyone. Now, saving money makes sense to employees because the money belongs
to them.

HSA critics ask whether individual accounts will encourage
people to save money at the expense of their health.

Mackey has the right response. “The premise in those kinds
of questions is that people are stupid. They’re not smart enough to make these
decisions for themselves. It’s sort of an elitist attitude. The individual is
the best judge of what’s right for the individual.”

And apparently, most individuals are making smart choices.

Harvard Business
School professor Regina Herzlinger
says studies show that “people who have these high-deductible health-insurance
policies take a lot better care of themselves. They have more yearly physicals.
Because they’re saying, ‘If I keep myself healthy, in the long run, I’m going
to be spending less money.’”

The critics also argue that spending on health care is too
complicated and important for individuals to control.

Mackey isn’t buying it. “Should we allow people to make
decisions about whether they have children or not? I mean, that’s a pretty
important responsibility!”

I pointed out that most people know nothing about complex
cancer treatments.

“I don’t know anything about cars,” he said. “But if I buy a
Toyota or an Audi or a Lexus, I
know I’m going to get a pretty good automobile because competition ensures that
it will be that way.”

It does. And competition will do the same in medical care.
All we need to do is put the individual in charge of his own money.

4 comments from readers

To post comments, please log in first. The Atlasphere is a social networking site for admirers of Ayn Rand's novels, most notably The Fountainhead and Atlas Shrugged. In addition to our online magazine, we offer a member directory and a dating service. If you share our enjoyment of Ayn Rand's novels, please sign up or log in to post comments.

I've often wondered why we don't price health insurance more like homeowners insurance. If you get a higher deductible the premium is lower, but you have to pay for that screen door that is ripped off in a storm. With a low deductible if the screen door costs $100 to replace you still might pay $50 from your pocket, but you generate another claim that costs a lot to process. So the premium is much higher.

In addition to the unwanted paperwork, most friction between clients and the insurance company results from relatively small claims. So some lawsuits are avoided as well with higher deductibles.

Insurance company control of patient care often prevents or delays needed care, stuffs the pockets of insurance company executives ($124 MILLION in one year to the head of United Healthcare, plus stock options, equal to yearly premiums for 12,000 families), and subverts the doctor-patient relationship.

This was a very informative broadcast. I enjoyed the fact that many different options and opinions were addressed. I learned alot! I was not going to watch the program because, I figured it was going to promote government run health-care and I am tiried of feeling like everyone thinks that people are to stupid to think for themselves. I do not need the government to think for me or my family. THANK YOU for acknowledging that people have a brain and should be using it!!!

To post comments, please log in first. The Atlasphere is a social networking site for admirers of Ayn Rand's novels, most notably The Fountainhead and Atlas Shrugged. In addition to our online magazine, we offer a member directory and a dating service. If you share our enjoyment of Ayn Rand's novels, please sign up or log in to post comments.